To: IMPRISTlNE who wrote (14429 ) 8/24/1998 1:27:00 AM From: Rob S. Read Replies (1) | Respond to
It's interesting to look back at the charts for AOL, YHOO, MSPG, and other leading internet stocks - the ones that have at least a couple of years of price data. I am looking at charts for AOL overlaid with charts on YHOO, MSPG, LCOS, AMZN and a few others - if I didn't see that the prices were off-set for these two stock, I'd think they were two displays of the same stock. The correlation in price movement is particularly similar between AOL, YHOO, MSPG, ELNK, & AMZN and the CBOE inet index. Some of the inet stocks that are not the "darlings" of investors tract less well but reflect the more pronounced movements. For the past few years, or as long as data is available, the inet stocks have shown significant seasonality. Late January through June or early July is seasonally strong. Some of this probably is because the tech stocks in general tend to do well during this period. The "January effect" tends to lift techs because of consumer and corporate purchasing cycles, product and inventory cycles. This period sees the results of strong winter and Christmas sales and renewed interest after typical late-year tax selling and portfolio window dressing (which effects the darlings more than other stocks). The inet stocks also benefit because winter shut-ins tend to spend more time on the internet and seasonally strong PC sales tends to increase inet users at a faster pace than during other seasons. October through late November tend to be seasonally weak. This is probably due to weakness in the tech stocks during this period as summer months tend to cause more distractions and outside activities, and PC sales are weak. So far we the inet stocks have been spurred to high levels with a lot of publicity surrounding the emerging visibility of e-commerce and because it is the hottest sector for IPOs. This tends to crank up the brokerage machines to "support" (hype) the IPOs and, consequently, the sector.
